ii. As far as forecasting future disbursements was concerned it was important that
the indexes used to forecast future disbursements should be consistent with those
used to convert the aid programme from constant to cash prices. The Statistics
Division would be able to provide the appropriate price indexes for this purpose.
iii. For the purpose of monitoring price changes which occur in the execution of
particular projects the Statistics Division would be able to provide price indexes relating to particular industrial sectors. These would be useful in judging
whether particular changes were reasonable or not.
iv. In project submissions the Committee needed to know that inflation had been
appropriately provided for and that estimates were based on recent reliable
information.
v. OP.A.12.045 b could be interpreted as referring to cost increases due to
physical changes in the project rather than to inflation.
vi. Existing commitments must have the first call on any additional cash funds made
available by Treasury revisions of price forecasts.
vii. Aid agreements should continue to be in cash terms.
viii. Paragraph 16 b of the paper implied an unnecessary narrowing of Under-Secretaries
discretionary powers.
ix. Regarding the text of the paper:-
a. Paragraph 4 sub-paragraphs ii.a and iv.a did not refer to the Export Price
Index but to other more closely related or sectoral indexes.
b. Paragraph 8 second sentence consideration should be given to defining "close".
c. Paragraph 16 b "unexplained" should be replaced by "total".
d. In paragraph 16 and following paragraphs "unexplained" required definition.
RECOMMENDATION
10. The Committee agreed that EPS should form a working party, which should include Finance Department and a Geographical Desk. The working party should, in the light of PC(75)55 and the Committee's discussion of it, prepare draft guidelines for eventual
inclusion in Office Procedures covering the following:-
i. a revision of OP.A.12.045 based on paragraph 16 of PC(75)55 but taking into
account the discussion which had taken place;
ii. a consistent procedure for forecasting the effects of price changes on project
aid commitments;
iii. a procedure for monitoring changes in the costs of projects with a view to
determining whether they were reasonable or not.
11. In carrying out this remit the working party should take full account of manpower
constraints.
12. The drafts should have a brief introductory note on the implications of inflation
for the Aid Framework and programme management, including the point at paragraph 9 v
above, and be sent to Under-Secretaries of Geographical Divisions, who should have
/them
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